EBRD funds Kazakh segment of China-Europe route bypassing Russia

Reuters: The European Bank for Reconstruction and Development will provide up to 50 billion tenge ($103.20 million) to Kazakhstan's state railway company to finance upgrades along a Europe-Asia route bypassing Russia, the bank said on Friday.

"Until recently, up to 95% of freight traffic between China and the European Union (EU) travelled through the Northern Corridor, which passes through Kazakhstan, Russia and Belarus," the EBRD said in a statement.

"As international carriers are increasingly looking for alternatives to crossing Russian territory, demand for transport through the Middle Corridor, which links Kazakhstan to Azerbaijan, Georgia and Turkey through the Caspian Sea, has increased significantly. Its development is of primary importance to the sustainability of regional trade."

The bank will invest the money into a local bond being issued by Kazakhstan Temir Zholy (KTZ), the railway company.

The investment will also help KTZ to restructure its balance sheet and implement a range of crisis response measures, including the reorganisation of its transit freight operations, to cope with the after-effects of the pandemic and ongoing geopolitical turmoil, the EBRD said.

Kazakhstan can transit Chinese cargoes both to Russia, by railway, and to Azerbaijan, by shipping them across the Caspian Sea from its Aktau port.

The Central Asian nation's own oil exports through Russia have come under threat after the operator of a pipeline which transports Kazakh crude to the Black Sea was ordered by a Russian court to suspend activity for 30 days on July 5.

The consortium, however, submitted an appeal and said the stoppage of the route might lead to irrevocable consequences. ($1 = 484.4900 tenge)